Kawasaki Kisen Kaisha (K Line) is taking drastic action as it fights to contain red ink stemming from the effects of the coronavirus pandemic. In announcing a loss today for the first quarter ending on June 30, the Japanese shipping giant laid out plans to slash its fleet by more than 50 vessels through to 2025. The company also revised downwards its full year prospects for 2020 and made plans to lay up a sizeable part of its fleet, led by car carriers.
“Regarding the Company’s full-year results ending 31 March, 2021, a harsh business environment is expected with the impact of COVID-19 pandemic, and the business environment surrounding the Company is to be kept uncertain,” K Line stated in a release, adding: “Placing the top priority on controlling the damage to the full-year results, the Group will steadily implement such measures as reducing operational costs through scaling-back of the fleet in accordance with the decline in cargo volume, rationalization of vessel allocation, suspension of vessel operation and mooring of vessels, securing sufficient liquidity on hand, and asset sales intended to support the capital base.”
The K Line fleet cuts are even more aggressive than those announced by compatriot Mitsui OSK Lines (MOL) at the end of June. MOL has said it intends to reduce its holdings by 40 ships – equivalent to around 5% of its fleet – with tankers, bulkers and car carriers all set to be offloaded. MOL is also planning to dispose of non-core assets including real estate as it prepares to get through one of its toughest periods in its 136-year history.